Mexico says pushing for NAFTA deal, autos still a sticking point

WASHINGTON (Reuters) - Mexico's economy minister said on Thursday he was pushing for a quick deal with U.S. officials in the renegotiation of the North American Free Trade Agreement (NAFTA), with a breakthrough on new rules for auto production still elusive.

Since restarting last month, the talks have focused on settling differences between Mexico and the United States at the centre of U.S. President Donald Trump's complaint that NAFTA has undercut U.S. manufacturing to Mexico's benefit.

Trump has threatened to withdraw from the 24-year-old trade pact between the United States, Mexico and Canada if it is not reworked to the advantage of the United States. He hopes to reduce the U.S. trade deficit with lower-cost Mexico and claw back jobs, particularly in the auto industry.

"The idea is to do our best to finish this agreement as soon as possible," Mexican Economy Minister Ildefonso Guajardo told reporters as he entered the latest NAFTA talks at the offices of U.S. Trade Representative Robert Lighthizer in Washington.

"It's better to have a good agreement than a fast (agreement)," the minister added.

Mexico and the United States have said they are close to resolving remaining bilateral issues in the revamp of the trade pact. However, a day earlier Guajardo had said the two sides might be able to reach agreement in "hours."

The tone has become more cautious since then.

Canada has been waiting for the Mexican and U.S. teams to reach common ground before rejoining the negotiations.

Much of the negotiation has focused on revising rules of origin for autos to try to bring more production to the region.

U.S. and Mexican officials say they will push for a deal that could open the door for Canada to return.

However, Canada's government reiterated on Thursday that it would need to be satisfied with any new rules of origin.

"Updating the 'rules of origin' has always been a very big, important and complicated effort," Canadian Foreign Minister Chrystia Freeland told reporters in British Columbia. "Canada clearly has an interest in how those rules are updated and we clearly will need to look at and agree to any final conclusion."

The Trump administration wants to be able to impose national security tariffs on future Mexican output from new auto assembly and parts plants, auto industry officials say.

That demand has been causing friction at the latest Mexico-U.S. talks, according to an industry source familiar with the process, who spoke on condition of anonymity.

Matt Blunt, president of the American Automotive Policy Council, also said there had been discussion of imported products that do not comply with new NAFTA requirements.

"We've not really been making any recommendations to the U.S. government on that topic," he told reporters on a conference call.

Blunt said that stronger automotive content rules emerging from NAFTA negotiations are expected to keep North America competitive as a production base, and that he was "very encouraged" by the direction of U.S-Mexico talks.

The threat of 25 percent tariffs could discourage new automotive investment in Mexico to serve the U.S. market.

A Mexican source said that Mexico would not accept tougher import rules under a new NAFTA than currently prevail in the United States under World Trade Organization tariff commitments, which foresee a 2.5 percent duty for light vehicles.

Asked whether tariff-related issues in the automotive sector were holding up progress at the talks, Guajardo said he was "not going to comment on every single item."

Guajardo has said he hoped that a deal in principle would be possible in August. Asked whether that was still the plan, Guajardo said that it was a "very efficient timeline."

(Reporting by Sharay Angulo and Timothy Aeppel; Additional reporting by David Lawder in Washington, Dave Graham in Mexico City and and Julie Gordon in Nanaimo, Canada; Editing by Marguerita Choy)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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